Asia Shares Stage Relief Rally on Cyprus Deal

Nyshka Chandran, News Assistant

Monday, 25 Mar 2013 | 3:17 AM ETCNBC.com

SHARES

Risk assets across Asia rallied on Monday after Cyprus secured a last-minute deal with international lenders for a 10 billion euro ($13 billion) bailout, narrowly avoiding a collapse in the Cypriot banking system.

Under the proposal, the island's second largest bank - Laiki Bank - will be split into a good and bad bank, in what's being called a bail-in. Deposits under 100,000 euros will be transferred to the larger Bank of Cyprus as amounts under that threshold will not be subject to a levy. Those above that will be used to resolve the country's debt.

"It does look like an acceptable deal but we can't put the political issues aside given the demonstrations we've seen in Cyprus," Gary Dugan, CIO Asia & Middle East at Coutts told CNBC Asia's "Squawk Box."

Experts tell CNBC that regardless of a deal, investors should not be basing decisions on the tiny Mediterranean island.

"We're talking about GDP less than half of the state of Idaho... It's not a huge economy, and I think its important for investors to keep that in context when you're making big picture investments with your money," said Joe Mayger of financial services company Motley Fool.

Japan's Nikkei recouped most of Friday's losses with retailers leading gains. Takashimaya soared 7.5 percent, Marui Group surged 5.8 percent and JFR added 5.2 percent. The rally comes as Japan and the European Union are set to discuss a free-trade deal this week.

In Sydney, shares pared gains after hitting an earlier one-week high of 5,023 points. This marks the fourth straight session that the index has been unable to close above the 5,000-mark.

Construction giant Leighton Holdings rebounded 4.3 percent after appointing board member Bob Humpris as its new chairman. Shares dived 7 percent on Friday on news of the resignation of former chairman Stephen Jones.

The benchmark closed just 5 points shy of a one-week high at 1,981 points, hit earlier in the session.

China's Economic Rebalancing Act

Michael Spence, Professor of Economics at the Stern School of Business at New York University, explains why he thinks China may unveil a set of fairly large system reforms in the next few months as the country attempts to rebalance its economy.

Greater China Earnings

In Greater China, investors chose to focus on corporate earnings for trading cues rather than Cyprus's bailout deal.

Mike Werner, senior equity analyst at Sanford C. Bernstein told CNBC why he believes the banking sector is worth buying into. "Trading at 1.1 times next year's book value as a group is very attractive....My top three picks are China Construction Bank, Bank of China and then ICBC," he said on "The Call."